Executive Summary
Coterra Energy Inc. delivered a solid operational and financial performance in the third quarter of 2025, underpinned by higher oil, natural gas, and NGL production, disciplined capital deployment, and meaningful free cash flow generation. Pre-hedge oil and gas revenues reached $1.7 billion, supported by a 7% QoQ increase in oil production and an all-time high NGL production of 136 MBbls/day.
The company generated $1.15 billion in discretionary cash flow and $533 million in free cash flow after capital expenditures, reinforcing its ability to fund dividends, reduce leverage, and maintain balance sheet strength. Full-year 2025 production guidance was raised to 777 MBoe/d at the midpoint (+5%), while projected 2025 free cash flow of ~$2.0 billion represents a 60% increase over 2024.
Coterra continues to prioritize shareholder returns, declaring a $0.22 per share dividend (yield >3.5%), while advancing deleveraging efforts with $600 million of term loan repayments year-to-date, leaving total debt at $3.9 billion and liquidity of $2.1 billion.
Financial Highlights – Statement of Profit or Loss ($’million)
$’million Q3 2025 Q3 2024 YoY
Total Revenue 1,676 1,242 +35%
Cost of Revenue 466 357 +31%
Gross Profit 1,210 885 +37%
Operating Expenses 740 561 +32%
Operating Income 470 324 +45%
Net Income 322 252 +28%
Diluted EPS ($) 0.42 0.34 +24%
EBITDA 1,089 799 +36%
Key takeaway: Earnings growth reflects higher production volumes and strong commodity pricing, partially offset by higher operating and interest costs.
Production & Operating Performance
Q3 2025 Highlights
- Oil production: +11,300 bpd QoQ (+7%)
- Total production: ~2.5% above midpoint guidance
- NGL production: Record 136 MBbls/day
- Cash operating costs: $9.81/BOE, up 5% QoQ due to mix and workovers
- Capital incurred: $658 million, near midpoint of guidance
Outlook
- Q4 oil production: ~175 MBoe/d (+5% QoQ)
- Q4 total production: 770–810 MBoe/d
- Q4 natural gas: 2.78–2.93 Bcf/d
- Q4 capital: ~$530 million
- FY2025 production guidance: Raised to 777 MBoe/d
- FY2025 capital: ~$2.3 billion
Cash Flow & Capital Allocation
Metric Q3 2025
Cash from Operations $971m
Capital Expenditure ($644m)
Free Cash Flow $533m
Discretionary Cash Flow $1.15bn
Dividend per Share $0.22
Projected FY25 FCF ~$2.0bn
Interpretation
- Strong operating cash flow supports dividends, debt reduction, and reinvestment.
- Capital spending remains disciplined, focused on high-return inventory.
Balance Sheet Overview ($’million)
$’million Sep 2025 Sep 2024 % Δ
Total Assets 24,007 20,126 +19%
Net PP&E 22,353 18,219 +23%
Total Debt 4,117 2,362 +74%
Net Debt 4,019 1,519 +165%
Total Equity 14,726 13,042 +13%
Interpretation
- Balance sheet remains resilient despite higher acquisition-related debt.
- Continued deleveraging improves financial flexibility.
Strategic & Operational Insights
- Permian integration success: Lea County (FME & Avant) assets delivering improved performance, lower costs, and deeper inventory.
- Portfolio balance: Exposure across oil, gas, and NGLs enhances resilience through commodity cycles.
- Capital discipline: Focus on returns over growth amid macro and geopolitical uncertainty.
- Shareholder focus: Dividend yield among the highest in the sector, supported by sustainable free cash flow.
Strengths
- Consistent production growth across core basins.
- Record NGL volumes and improving oil mix.
- Strong free cash flow generation.
- Disciplined capital allocation and balance sheet management.
- Attractive dividend yield (>3.5%).
Weaknesses
- Higher cash operating costs (+5% QoQ).
- Exposure to low regional gas pricing (Waha).
- Elevated leverage post-acquisitions.
- Limited visibility on 2026 guidance.
Outlook
Coterra is well-positioned to deliver durable free cash flow growth through 2025, supported by rising production, disciplined capital spending, and improving asset quality. While commodity price volatility and infrastructure constraints remain key risks, the company’s diversified portfolio and strong liquidity provide a meaningful buffer.
Analyst View
“Coterra’s Q3 2025 performance underscores its ability to grow production while maintaining capital discipline and generating robust free cash flow. With raised full-year guidance, a strong dividend, and ongoing deleveraging, the company offers an attractive balance of income, growth, and balance sheet resilience in a volatile energy market.”
Conclusion
Coterra Energy delivered a strong Q3 2025, marked by above-guidance production, record NGL volumes, rising free cash flow, and shareholder-friendly capital allocation. With higher full-year guidance, a solid balance sheet, and improving asset performance, Coterra remains well-positioned to navigate commodity cycles and deliver sustainable value into 2026 and beyond.
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Disclaimer
The user Wane_Investment_House holds no position in NYSE:CTRA. Simply Wall St has no position in any of the companies mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
